BE9â2 Water Emporium issues $20 million of 4%convertible bonds that mature in 10 years. Each $1,000 bond isconvertible into 20 shares of common stock. The current marketprice of Water Emporium stock is $40 per share.

1.

Explain why Water Emporium might choose to issue convertiblebonds.

2.

Explain why investors might choose Water Emporium's convertiblebonds.

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Jarrod RobelLv2

5 Mar 2019

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